A power of sale listing is not a discount. The lender is selling to recover a debt, it has never set foot inside the property, and the agreement it hands you strips out most of the protections an ordinary seller gives. Some of those risks are manageable. Some are not.
Our charges include applicable taxes. Disbursements are extra and billed at cost — itemized upfront, in writing, never hidden.
From $1,354.87 taxes included
Power of sale is the remedy Ontario lenders use instead of foreclosure. After default, the lender serves a statutory notice under the Mortgages Act, a redemption period runs, and if the borrower does not pay the arrears the lender can sell. The borrower holds title until the sale closes — the lender is selling the borrower's property, not its own.
What that sale delivers is title free of the interests ranking behind the mortgage being enforced. Second mortgages, later liens and later executions are cleared off. Anything ranking ahead of it is not: a prior charge, prior easements and restrictive covenants, and municipal tax arrears stay with the property. Where a second mortgagee is the one selling, the first mortgage survives the sale.
The lender gives no covenants for title, no representations about the property, and no history. It cannot tell you whether the roof leaks, whether the basement apartment was permitted, or whether the furnace works, because it genuinely does not know. None of the disclosure an ordinary seller would provide is available, and none of it is going to appear later.
The lender does owe the borrower a duty to act in good faith and to take reasonable care to obtain the true market value of the property. That duty is owed to the borrower, not to you. In practice it means lenders list at market through an agent and take the best offer, which is why the bargain buyers expect frequently is not there.
Expect a schedule that deletes most of the standard clauses. The property is sold as is, where is. Chattels, appliances and window coverings are not warranted and may not still be in the house. Representations about systems, past uses and compliance with law are struck out. The requisition period is short, sometimes only days, and the lender will not extend it for you.
The lender also reserves the right to terminate. If the borrower redeems the mortgage, obtains an injunction, files an assignment in bankruptcy, or a defect in the notice process comes to light, the deal ends and your deposit is returned — usually without interest, and expressly as your only remedy. You cannot force the sale through and you cannot recover your costs.
Deadlines run one way. Closing extensions are typically at the lender's option, priced, and refused as often as granted, while your financing approval and rate hold are not the lender's problem. Get financing fully approved on this specific property before conditions come off; appraisals on distressed properties come in low, and lenders decline them more often than ordinary purchases.
Read the lender's schedule against the standard form line by line before the deposit is delivered. That is the point at which a lawyer changes the outcome — once the deposit is in, the terms are the terms. Our flat residential purchase fee is $1,354.87 with taxes included; <a href="/pricing">pricing</a> sets out what is included and what is billed at cost.
Start with priority. The parcel register shows which mortgage is being enforced and what sits ahead of it. Tax certificates show what the municipality is owed and whether the arrears are old enough to be heading toward a tax sale. Executions, construction liens and Crown claims all need to be searched properly rather than assumed away because the listing says title is clean.
Occupancy is the risk buyers underestimate. Nobody guarantees vacant possession. The former owner may still be in the house on closing day with the locks changed, and removing them takes a writ of possession and the sheriff, at your cost and on the court's timetable. Where there are tenants, the <a href="https://www.ontario.ca/laws/statute/06r17">Residential Tenancies Act, 2006</a> protects them and the tenancy continues after your purchase.
Condominiums add a layer. Common expense arrears can rank ahead of the mortgage and become yours, and the status certificate will show them along with any lien, special assessment or litigation the corporation is carrying. Order it and read it, even though the lender did not, and even though the unit has probably sat empty long enough for the arrears to be substantial.
Tax treatment is worth confirming early. A resale residential home is generally exempt from HST under the <a href="https://laws-lois.justice.gc.ca/eng/acts/E-15/">Excise Tax Act</a>, but a commercial property, a substantially renovated home or a never-occupied new build can attract HST on top of the price. Title insurance is effectively mandatory here, since the lender provides no survey and no history at all.
Yes, though not as of right. The statutory right to reinstate by paying the arrears and the lender's costs runs only until the lender enters into a binding agreement of purchase and sale; after that the borrower must pay out the mortgage in full, and it is the redemption clause in the lender's own schedule that lets the lender cancel on you before closing. Injunctions and bankruptcy filings can do the same thing. Your deposit comes back, but the time, the inspection, the appraisal and the rate hold do not. Never sell your current home on the strength of a power of sale purchase closing.
You can arrange one if the lender gives access, and you should, but the offer often cannot stay conditional for long — competitive power of sale offers tend to be firm or nearly firm. Utilities may be shut off, which limits what any inspector can actually test. Price that uncertainty into your offer instead of assuming the discount already covers it.
Only those attached to the property and ranking ahead of the mortgage being enforced — property tax arrears, prior charges, some condominium common expense arrears, and certain utility charges added to the tax roll. Personal debts and judgments ranking behind that mortgage are cleared by the sale. The line between the two is drawn by searching, not by assuming.
Sometimes, but not reliably. The lender must take reasonable steps to obtain fair market value, so these properties are listed by an agent at market price. Discounts, where they exist, reflect condition, unknown history and the one-sided terms of the agreement rather than a motivated seller. Budget for the repairs you cannot see before closing.
It does not stay with the lender. Surplus proceeds are applied to the encumbrances ranking behind that mortgage in order of priority, and whatever remains belongs to the former owner. The lender must account for the sale in writing. This matters most if you are the borrower rather than the buyer, and the statement is worth reviewing closely.
Open your file tonight — a licensed Ontario lawyer will confirm everything with you by tomorrow.